Nick Clegg: I want to be Prime Minister

Pitch to voters: Lib-Dem leader Nick Clegg promised Britain a fresh start at the launch of his party’s manifesto in the City today

Nick Clegg urged voters to "try something new" today with a manifesto promising Britain a fresh start after the disillusionment over expenses scandals and recession.

Launching the Liberal Democrat manifesto in the City, the party's leader promised to turn anger into hope as he declared: "I want to be prime minister."

Mr Clegg, now emerging as a power broker in the election campaign, said Labour and the Conservatives had forfeited people's trust. He went on: "If we learn from the mistakes of the past and try something new, we can turn anger into hope, frustration into ambition, recession into opportunity for everybody."

A poll today put the Tories just three points ahead of Labour — increasing the chances of a hung parliament in which the Lib-Dems could hold the balance of power. The 103-page manifesto promises a radical tax change — raising the starting rate of paying income tax to £10,000 — which would be funded by a series of levies on the better-off, a crackdown on tax avoidance and new green taxes.

Millions of low earners would be up to £700 better off from the £17 billion tax shake-up. But Mr Clegg faced a string of questions over whether his party could really achieve nearly a third of it — £5 billion — from savings through closing the tax loopholes.

The tax change also faced criticism that it would hand out billions, rather than paying down Britain's debts, including more for people on £10,000-plus than for those on less though the better paid would be hit by other fiscal changes.

Pensions would also be raised in line with earnings, inflation or 2.5 per cent, whichever is the higher. Other key pledges are smaller school class sizes, more green jobs, breaking up the banks and more police.

Seeking to paint his party as the most honest, the Lib-Dem Treasury spokesman Vince Cable insisted every promise was fully costed and matched by savings elsewhere, in a package that Mr Clegg hailed for offering "hope married to credibility, optimism that is in touch with reality". Mr Cable declared himself the "Elephant Man" as he accused both the Tories and Labour of ignoring the "elephant in the room" — the major cuts needed to balance Britain's books.

In contrast to Tory leader David Cameron, who promised "more for less" yesterday, senior Lib-Dems privately admitted that they were offering "less for less", though Mr Clegg and Mr Cable stopped short of saying this publicly. Mr Clegg nudged open the door for a pact with Labour if there is a hung parliament by stressing that he only believed a party had a "moral right" to seek to govern if it had both more MPs and had won more of the popular vote.

He also vowed to smash the influence of vested interests such as the City and proposed a string of limits on bankers' bonuses which he believes Britain should be ready to impose, by itself, if it fails to get international backing.

Mr Clegg later admitted that there was still a shortfall of about £5 billion a year in his plans needed to halve the structural deficit within four years.

The Conservatives attacked the plans as not "credible", claiming to have identified a £11.6 billion black hole.David Cameron said: "If you want to have a more family friendly, a greener Britain, a more liberal Britain, then the people who can get that done in government are the Conservatives."

Labour's Liam Byrne added: "What the Lib-Dems are showing today is that their sums simply don't add up and what they offer comes at the price of cuts for families." Among Lib-Dem proposals to save £15 billion — some of which will be seen as cuts — are a £3 billion banking tax, a £400 pay rise cap for public sector workers; cutting thousands of jobs in Whitehall; ending government payments into child trust funds; cutting child tax credits for high earners; and scrapping ID cards.

Mr Cable did not rule out further tax rises as a "last resort" in order to balance Britain's books. A "mansion tax" of one per cent on homes worth more than £2 million, many of which are in London, would also be introduced.

Mr Clegg said he would introduce fixed-term parliaments, give voters the power to "sack" MPs who fiddled their expenses, a fully-elected House of Lords and proportional representation.

What the Liberals promise

Constitution

Sweeping constitutional changes are one of the Liberal Democrats' four key demands. They include fixed term parliaments, a fully elected House of Lords and proportional representation — although they have not made that a "deal breaker".

They also propose that voters should be able to "sack" their MP through a power of recall. They also support a written constitution.

But Labour could almost have written this chapter of the Lib-Dem manifesto as the parties flirt with each other before a possible deal in a hung parliament.

Health

The Liberal Democrats have not ring-fenced NHS spending and would wield the axe in areas that they deem wasteful.

The Department of Health would be cut by half, strategic health authorities and some quangos abolished as well as other projects scaled back in a bid to channel money into frontline services. They warned voters to expect significant cuts in "waste".

The Lib-Dems back, in principle, minimum pricing for some alcoholic drinks as part of moves to reduce poor health.

Environment

Green policies would be used to create jobs and save the planet. Householders could get £400 towards double glazing, a new boiler or a turbine.

Schools would be lent extra cash for energy-efficient buildings.

Loans would be available for home renovations that cut energy use. Air pollution would be curbed by axing Heathrow's proposed third runway and tightening rules on carbon emissions.

Economy and Tax

Low earners would get the first £10,000 of income tax-free, saving £700 a year, paid for by a range of tax rises on the better off, including a mansion tax, lower pension relief and a crackdown on tax evasion.

About 3.6 million would pay no income tax, which the Lib-Dems say would increase incentives to work. The move would be offset by a mansion tax of one per cent on properties worth more than £2 million. They would break up the banks and boost green jobs.

Education

About £2.5 billion would go on a "pupil premium" to schools teaching a million disadvantaged children. The money could be spent on smaller class sizes and more one-to-one tuition.

A minimum curriculum in schools, giving greater freedom, and less rigid testing. Earlier intervention to help children who are falling behind, to prevent them dropping out.

Better teacher-training by increasing the Graduate Teacher Programme.

Transport

The Liberal Democrats could oppose a third runway at Heathrow.

They highlighted this as one way of their pledge to clean up the environment to protect public health.

They are also proposing a high-speed rail link from London to the North, tighter regulation on vehicle exhausts and higher levies on internal flights.

The policies may appeal to rail users but risk angering motorists and frequent fliers.